Choosing Your Financial Advisers
2 Choosing Your Financial Advisers
Choosing financial advisers is an important first step
towards successful investment planning. Having access
to sound, objective financial advice will be key to your
long term financial success. With that in mind, you should
take the time to choose your financial advisers just as
carefully as you would a family doctor or a lawyer.
In Canada, securities laws require anyone trading securities
or in the business of advising clients on securities to be
registered with (licensed by) the provincial or territorial
securities regulator, unless a registration exemption applies.
Both the company employing the trader and the individual
representative trading or advising in securities must be
registered in the province where the investor resides. This
regulatory system ensures that all registered dealers and
advisers meet certain minimum standards. However, it does
not mean that they are all equally skilled, that they provide
the same services, or that they charge the same fees.
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What types of financial advisers are there?
Dealers
Dealers are firms that are registered with securities
regulators to buy or sell securities on behalf of clients.
This registration also allows them to provide advice to
clients about the purchase or sale of securities. There are
many different types of dealers offering different products
and services and specializing in different areas:
•• Some are large national firms, while others are very
small and operate in only one province or territory, or
one city.
•• Some dealers are full service stock brokerage firms,
registered to buy or sell a full range of securities, while
others are restricted to certain types of products such
as mutual funds, scholarship plans, real estate securities
or exchange contracts.
•• All dealers are subject to regulation by provincial or
territorial securities regulators. Some are also members
of self-regulatory organizations.
•• Some, but not all, dealers participate in contingency
funds such as the Canadian Investor Protection Fund
(CIPF). These funds are not designed to cover losses
on investments but they provide reimbursement (within
limits) for cash or securities lost in the event a dealer
becomes insolvent.
•• Some dealers offer clients a full range of trading,
research and advisory services, while others specialize
in providing low cost trading services for investors who
“Anyone trading in or advising clients on are able to make their own investment decisions.
securities must be registered with the
provincial or territorial securities regulator.”    Choosing Your Financial Advisers
Advisers
Advisers are firms that specialize in providing advice to
clients about investing in securities, but do not offer the
trading services that are provided by dealers. You would
look to a registered adviser purely for investment advice
or if you wanted someone to manage your investment
portfolio on your behalf.
Advice can come in different formats: face to face, written
(newsletters and advertisements), e-mail, audio and Internet.
Some advisers, called portfolio managers, are authorized
to make discretionary trades on behalf of their clients (you
give them authority to make investment decisions and to
trade on your behalf without consulting you on each trade).
Advisers must be registered with the regulator in your
jurisdiction and, like dealers, may offer different services
depending on their category of registration.
What about financial planners?
Financial Planners determine
how individuals can meet
their life goals through
proper management of their
financial resources and offer
financial services such as
personal budgeting, cash and
debt management, retirement
and tax planning. Except in
Quebec, financial planners
are not currently subject to
provincial registration or
regulation, although a number
of jurisdictions are considering
the issue. If, however, a
financial planner wants to
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Choosing Your Financial Advisers
4
trade in securities, he or she must become registered
under the securities legislation. Without that registration,
financial planners cannot trade securities for their clients
or recommend the sale or purchase of specific securities.
Across Canada, many financial planners have become
registered to trade in mutual funds and segregated funds
(a similar insurance product), allowing them to trade
and advise clients only with respect to mutual funds or
insurance products.
Selecting your financial adviser
Investing your life savings involves a great deal of trust –
trust in the management of companies you invest in, and
trust in the people who advise you and handle your investment
funds. However, trust should never take the place of careful
research and healthy skepticism. Don’t make your choice
of financial advisers lightly.
How do I start?
When you start your search for a dealer or adviser, remember
that you want to have confidence in and be comfortable
with both the firm and the individual representative who will
service your account. Find out if the firm focuses on certain
sectors of the market or on certain types of securities. Make
sure the firm’s style and the individual representative’s style
match your own.
Decide what kind of investment services you need. Are you a
knowledgeable investor who plans to do your own investment
research and make your own investment decisions? If so, you
may want to find a dealer who will simply execute trades for
you quickly and at the lowest cost. A discount brokerage firm
might be right for you.
Are you looking for someone who can provide investment
advice, make recommendations on specific securities and

Choosing Your Financial Advisers
also execute the trades for you? If so, you may want to look
for a suitable full service dealer or you may want to find an
independent investment adviser to provide the advice you
need and a discount broker to execute the trades on your
instructions.
Do you have a substantial investment portfolio and are
you looking for someone to take control of the portfolio
and manage it on your behalf? If so, a portfolio manager
may be able to provide the services you need.
Are you interested only in mutual funds? If so, you will have
a choice of many mutual fund dealers as well as the full service
dealers in your area.
Where do I look?
Word of mouth can always be helpful in identifying capable
financial professionals. Ask for recommendations from your
accountant, your lawyer, your family, or friends whose
judgement you trust.
Your local Yellow PagesTM can provide you with the names of
many or all of the dealers and advisers in your area under
headings such as ‘bonds – investment’, ‘brokers – stocks and
bonds’, ‘financial planning’, ‘investment advisory services’,
‘investment dealers’, ‘investment management’ and ‘stocks
and bonds’.
You may also want to contact the Investment Dealers
Association of Canada (IDA), the Mutual Fund Dealers
Association (MFDA) or the Investment Counsel Association
of Canada or one of the stock exchanges to obtain a list of
the member firms that are registered in your area. In some
jurisdictions, you may also be able to contact your provincial
or territorial securities regulator to obtain a list of all of the
registered dealers and advisers in your area.
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Choosing Your Financial Advisers
6
What questions should I ask?
Once you have identified a list of firms that you might want
to work with, you can obtain more information to help you
make your choice. A good first step is to contact the branch
manager for the firm. Some of the questions you might ask are:
•• Is the firm in the market for new clients such as you, with
your expected account size and your general investment
objectives?
•• Does the firm or individual specialize in a particular
type of investment product or a particular clientele?
For example, does it focus on speculative securities,
mutual funds or blue chip stocks? Does it cater to
conservative retail investors, high net worth clients,
institutions or speculators?
•• Does the firm or individual have any special expertise in
the types of investments that might be of interest to you?
•• What products is the firm or individual registered to sell
or advise on? How long has the firm been registered?
Does it operate in other jurisdictions as well? How many
employees does it have? How many clients?
•• What services does it provide to clients like you? For
example, does the dealer provide trade execution only,
or does it provide advice, research and trading?
“You want to
find someone
who deserves
your confidence
and your trust.”

Choosing Your Financial Advisers
•• Does the firm have an internal research department
that provides research reports to clients? Does it offer
any educational seminars for its clients?
•• How does the firm charge for its services? What
commission rates or fees would a client like you
expect to pay?
•• If you opened an account, what representative(s) might
be available to you? What are their experience and
qualifications?
•• Has the firm been subject to any disciplinary proceedings
in the past few years? What about the individuals you
might be dealing with?
•• Is the firm a member of a contingency fund designed
to protect clients in case of insolvency? If so, what
coverage does the fund provide?
Many firms have written materials about themselves and
their services that will answer many of the questions.
If you are like most clients, you will find that you deal with,
and rely heavily on, a single individual with the firm. For that
reason, it is very important that you know as much as you
can about the person’s skills, knowledge and expertise, their
approach to investing and their ability to provide the personal
service you expect. You want to find someone who deserves
your confidence and your trust. Ensure you arrange to meet
with the person and ask about their educational qualifications,
their experience, their investment philosophy, and their
specialties. You may also want to ask for references, the
size of their client list and the amount of an average client
portfolio, and about their disciplinary history. If the person
never has time to meet with you, is unwilling to discuss
their qualifications or history, or is not keenly interested in
your financial goals and objectives, you should probably
look elsewhere.
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Choosing Your Financial Advisers
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You can always contact your securities regulator for
additional information. Since many dealers and advisers
are members of the local Better Business Bureau, a stock
exchange, the IDA or MFDA, you should consider checking
with these sources for more information about the firm’s
history and current standing.
Opening an account
After you have
chosen a firm and
an individual within
the firm, you and
your new financial
representative will
complete a number
of forms to open
your account. Some
of these forms (for
example, the cash or margin account agreements)
describe the nature of your account(s) and the legal rights
and remedies available to both you and the firm in case of
a dispute. These forms are often dry reading, full of legal
language. Even so, you should read and understand the forms
before you sign. If you don’t understand part of a form, ask your
representative for an explanation, line-by-line if necessary.
The cardinal rule for every dealer and adviser is that they
must know their client. In other words, they must learn the
essential facts relative to every client and must determine
the general investment needs and objectives of the client.
To help them do this, most firms prepare a detailed New
Client Account Form (also called a Know Your Client form)
that contains key personal and financial information about
the client. While the detailed questions may seem somewhat
invasive, the information you provide in this form is necessary
if the dealer or adviser is to provide effective service and
prudent advice.

Choosing Your Financial Advisers
The form will generally include your name, address, employment
information, credit references, income, net worth,
investment experience, risk preference and investment
objectives. Most forms also ask whether anyone else has
any interest in or authority over your account, and whether
you are an insider or control person of any public companies.
They may also include information relating to the transfer
and registration of securities held in your account.
Many firms now use forms that require the signature of the
client. Before you sign the form, make sure that everything
in it is correct. Errors in the form may lead to inappropriate
advice and may erode the legal protections you are entitled
to if something goes wrong. Get a copy of the form and keep
it with your account records. Make sure that you contact
the firm (preferably in writing) to have the form updated
whenever the information in it changes. This is particularly
important with key information such as your address, your
personal financial circumstances and your investment
objectives.
In some jurisdictions, many dealers that simply provide
trading services at an investors direction and do not offer
advice have received an exemption from the know your
client rule.
In most cases, you will also be asked to complete a shareholder
communication form in which you will indicate the
amount of information, such as annual reports, financial
statements, proxy circulars and notices of the shareholder
meetings, that you wish to receive from the companies in
which you invest. The form will also ask whether or not
you consent to the disclosure of your name and securities
holdings to those companies.
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Choosing Your Financial Advisers
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What are my responsibilities as a client?
No matter how well intentioned the dealer or adviser, no
one will ever care as much about your financial health as
you do. As an investor, you must be prepared:
•• to research and monitor your investments, ask
questions of your financial advisers, and educate
yourself about investing.
•• to communicate clearly and honestly with dealers
and advisers so they understand your financial
circumstances, investment objectives and experience.
•• to be realistic in your expectations of profit.
•• to appreciate that investing can involve risk.
•• to read any offering documents that are provided
to you in connection with an investment (such as
a prospectus or offering memorandum).
•• to read and retain your confirmation slips and statements
of account, as well as notes of conversations between
you and your dealer or adviser. This will enable you to
alert your dealer or adviser immediately if there are
errors in or problems with your account.
•• to ask questions about investment matters that you
do not understand.
“No one will
ever care as
much about
your financial
health as you
do.”

Choosing Your Financial Advisers
What should I expect from my dealer or adviser?
You should expect your dealer or adviser
(firms and representatives):
•• to be competent and ethical, and to act in your best
interests at all times.
•• to deal with you fairly, honestly, and in good faith.
•• to find out your general investment needs and objectives.
•• to make recommendations that are consistent
with those investment needs and objectives.
•• to disclose the risks associated with their
recommendations.
•• to disclose any conflicts of interest that they may
have concerning their recommendations to you.
•• to provide prompt written confirmation of trades made on
your behalf, with details of the value of the transaction
as well as the commissions or fees charged.
•• to provide regular statements of accounts detailing the
transactions in your accounts, the fees charged and
the securities held on your behalf.
•• to obtain your express authorization in advance of every
trade made on your behalf (unless you have provided
proper written trading authority or power of attorney to
someone else).
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Choosing Your Financial Advisers
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You should not expect your dealer or adviser:
•• to be successful in every investment recommendation
they make. No one can predict future market performance
with certainty.
•• to know what investment opportunities might be suitable
for you unless you discuss your financial position, your
objectives and your risk tolerance with them in detail.
•• to be aware of changes in your financial situation or
investment objectives unless you tell them.
•• to act on vague or general instructions to buy or sell
securities ‘when the time is right’. Unless you have
vested proper written trading authority in someone else,
registrants can only act on specific instructions from you.
•• to charge all clients the same commissions. Commissions
are negotiable and larger clients may be able to negotiate
lower commission rates.

Choosing Your Financial Advisers
What should I do if a problem arises with my
dealer or adviser?
In some cases, the problem may be nothing more than
an administrative error. In other cases, the problem can
be much more serious.
Here are some tips to help you deal with problems
quickly and effectively:
•• Make written notes of your conversations with your
dealer or adviser, particularly when you give instructions
to buy or sell a security.
•• Retain copies of all the forms, confirmation slips, account
statements and correspondence concerning you
investments.
•• If you identify a problem, notify your dealer or adviser
immediately. Follow up in writing if possible. Do not
wait to see if the error works out in you favor.
•• If the problem is not resolved promptly, contact the
firm’s manager or compliance officer, preferably in
writing.
•• If the problem still cannot be resolved, or if you think
there has been misconduct, contact the securities
regulator. If your dealer is a member of the IDA, MFDA
or stock exchange, contact that agency first. If your
dealer or adviser is not a member of a self-regulatory
organization, direct your complaint to your provincial
or territorial securities regulator.
•• You may also want to seek legal advice about the
remedies available to you.
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Choosing Your Financial Advisers
What can I expect from the regulators?
In Canada, the provincial and territorial securities regulators
and the self-regulatory organizations play a role in registering
firms and individuals in the securities business. They can
be important sources of information about registrants and
about the securities in which you might invest. Depending
on the jurisdiction, the regulator may be able to give you
information that includes:
•• whether or not a firm or individual is registered in your
jurisdiction.
•• a firm’s or individual’s category of registration.
•• whether or not they have terms and/or conditions
on their registration.
•• whether or not they have been subject to disciplinary
proceedings.
You can also expect
the regulators to help
you understand your
rights as an investor,
and the laws and rules
that govern the conduct
of people under their
jurisdiction.
Finally, you can expect the regulators to look into legitimate
complaints about the conduct of a dealer or adviser (or of
anyone engaged in market activities) under their jurisdiction.
Keep in mind that regulators are authorized to discipline
those who engage in misconduct, but they do not have the
power to order the payment of financial compensation to
investors. That is the exclusive territory of the courts.
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